Macquarie: The incremental evolution model
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Macquarie: The incremental evolution model

Change is the only constant for Macquarie, helping it through the global financial crisis and beyond, and making it one to watch as it develops new Asian markets.

Ben Way,780

Ben Way, Macquarie: “We’re playing to a strength in Asia that didn’t exist five years ago”

These days, it’s all the rage to evaluate and reinvent your own institution; Macquarie has been doing it for most of its 50 years.

Before the global financial crisis, for example, it was largely an investment bank, dominated by market-facing businesses, specializing in creating listed funds.

Today, the majority of its business is what it calls annuity style: stable and reliable businesses generating a yield, including one of the world’s largest asset management businesses, with A$542.7 billion ($367 billion) under management as of March 31. It has transformed itself within a decade, and not for the first time in its history.

“Our model is all about incremental evolution,” says Ben Way, chief executive for Asia at Macquarie Group. “While the businesses we carry out change and evolve, reflecting the dynamic and turbulent markets that we operate in, the way we go about it has been consistent for a long time.”

In practice this means people close to clients making decisions about business direction, a bottom-up approach that trusts the people on the ground.

“It’s not the centre saying: ‘This is what we should do’, but the teams on the ground and in the markets,” says Way.


Asia is a useful case in point. As people have urbanized, moved into cities and become wealthier, Macquarie has positioned for the changes that have come from that trend, such as the growth of insurance and pension funds that have needed to diversify away from traditional asset allocation as they have grown.

Institutions like that have become a huge source of capital for Macquarie’s adventures in asset management and infrastructure in particular.

As regulations have changed from Japan to Korea to China allowing capital to move, “we have been able to export that capital from Asia to the rest of the world,” says Way. “It’s a good example of spotting an opportunity, putting in the time required to understand clients, and executing over time.

“We’re playing to a strength in Asia that didn’t exist five years ago.”

Macquarie as a whole is going from strength to strength. The record A$2.98 billion result for 2019 was up 17% on the year and continued a 50-year streak of never having failed to make a full-year profit. It is diversified by business line and geography, has a return on equity of 18% and a well-funded balance sheet. It sailed through the toxic Royal Commission into banking behaviour in Australia almost unscathed.

Macquarie as a whole is going from strength to strength. The record A$2.98 billion result for 2019 was up 17% on the year and continued a 50-year streak of never having failed to make a full-year profit

A strong risk management framework protected the bank during the global financial crisis when every peer that looked anything like it went under.

“The idea of a grand plan has never been a feature of our organization,” says Way. “A business that exists today might not be a good business in two years.”

These days Macquarie is perhaps best known for being one of the world’s largest infrastructure managers – and, through its Macquarie Capital division, a developer of new infrastructure in its own right.

That space has become very crowded in the 30 years Macquarie has been in the sector, but Way is still positive.

“There is still a long way to go in terms of building infrastructure,” he says. “We need new or upgraded airports, communication infrastructure, data centres, water treatment and renewable energy, no matter where we are in the world.”

It seeks to get ahead of the megatrends. If, in Asia, “the megatrend of our lifetime is urbanization,” this creates needs not just for energy and roads but logistics and digital capacity, for malls to absorb the growing wealth and changing leisure expectations, and for the repurposing of real estate to meet those needs.


A decade ago Macquarie handled the infrastructure through a slew of listed funds, many of them in Singapore. These days, there’s no need: they’ve all been delisted bar two, in New York and Korea, and today Macquarie does what it needs to through unlisted funds, taking advantage of the vastly increased depth of institutional pools of capital that have emerged.

Part of the skill is to be quick to exit what isn’t working. An example is equity capital markets, and much of the research and brokerage that goes around it, such as the old Barings business Macquarie acquired from ING back in 2004.

“Ten years ago, we did a lot more capital markets work focused on IPOs of companies around the region,” Way says. “That marketplace has become much more intense. There is a smaller pool of fees and more people competing.

“We de-prioritized that in Asia. There is better use of our resources than to have teams of people spending months working on IPOs for small fees.”

Today Asia represents 9% of group income, but that understates the region’s importance; it is the largest source of capital for the group globally, but those funds and fees will be recognized in the place the money goes, rather than where it came from.

Overall, 66% of income comes from outside Australia.

Macquarie has a new group chief executive, Shemara Wikramanayake, but neither Way nor anyone else seems to expect much change. Wikramanayake has been at Macquarie since 1987 and led Macquarie Asset Management before taking the top job. The transition from former chief executive Nicholas Moore appeared seamless.

“What we’d expect Macquarie to do under Shemara is exactly what we’ve been doing for the last 50 years, which is to continue to evolve,” Way says.

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